Chapter 14 Project Planning & Acquisition. Advanced Organizer.

Chapter 14

Project Planning & Acquisition

D ecision M aking

P lanning

O rganizing

Leading

C ontro lling

M anagem ent Functions

R esearch

D esign

Production

Q uality

M arketing

Pro ject M anagem ent

M anaging Technology

T im e M anagem ent

E th ics

C areer

Personal Technology

Managing Engineering and Technology

Advanced Organizer

Chapter Objective

• Describe the main elements of a project

• Describe the management tools used in project planning (scheduling techniques)

• Steps in a project life cycle• Describe the different types of project

contracts

Characteristics of a Project

• A collection of tasks aimed toward a single set of objectives with finite life span and budget

• A one-of-a-kind activity that has definite starting and ending points

Essential Considerations

• Time (project schedule)• Cost (dollar & other resources)• Performance (extent the objectives

are achieved)

Project Proposal ProcessProject Initiating Phase

• Description of what is to be accomplished

• Proposal or estimate of time and cost

Keys of Successful Project Proposal

• Prepare in advance (pro-active)– Technical capabilities/skills/skill mix– Assessment of future technologies– Assessment of future markets

• Maintain new business groups– Preliminary bid decision

• Start early on developing a response

Proposal Preparation

Identify new businessopportunity

Prelim. biddecision

Assess and plan the new

business acquisition

Develop the new

opportunity

Biddecision

RFPDevelop

proposal & pricing

Negotiate contractWin

Proposal Preparation• Proposal manager• Proposal team (from functional dept.)• Kickoff meeting

Department ManagerSales Representative

Proposal Contents

• Management proposal• Technical proposal• Cost proposal

Project Planning

Elements:• Scope• Schedule• Budget

Concerns:• Quality of the

deliverables• Quality of the project

process

Project Planning -- Scope

• Statement of work (SOW)– Problem or opportunity– Goal– Objectives

• Outcome, Time frame, Measure, Action– Success criteria– Assumptions– Risk– Obstacles

Project Planning -- Schedule

• Work Breakdown Structure (WBS)– Level-by-level subdivision of work to be

performed in a contract– Common framework or outline– Complicated task is subdivided into

several smaller tasks– Process continued until task can no

longer be subdivided


Minor Fan Rig

WBS

Functional Organization• Manufacturing• Engineering

• Design• Mechanical• Analytical• Drafting

• Testing

Cost Account

Cost Account

Cost Account


• Cost account consists of 1 or more work packages

• Work package incorporates:– Tasks to be performed– Schedule– Budget– Work package manager

• Work packages provide the framework of project reporting and control

• Milestone Schedule–Key dates–May include entrance and exit

criteria for each milestone

Project Planning Tools – Milestone Schedule

Project Planning Tools –Milestone Schedule

Production release

Final design review

System test complete

Prototype complete

90% design release

Prelim. design review

Complete project plan

Project go-ahead

JMAMFJDNOSAJJMAMFJ

2008 2009Milestone

Project Planning Tools –Gantt Chart

• Popular tool for project scheduling• Graph with bar for representing the

time for each task• Provides visual display of project

schedule• Also shows slack for activities

– (amount of time activity can be delayed without delaying project)

Month

20 4 106 8

31 5 7 9

Activity

Design house &obtain financing

Lay foundation

Order & receivematerials

Build house

Select paint

Select carpet

Finish work

Project Planning Tools –Gantt Chart

Project Planning Tools – CPM/PERT

• Critical Path Method (CPM)– DuPont (1958)– deterministic task times– activity-on-node network construction

• Project Eval. & Review Technique (PERT)

– US Navy, Booz, Allen & Hamilton (1958)– multiple task time estimates– activity-on-arrow network construction

The Project Network

Network consists of branches & nodes

1 32

Branch

Node

Network Construction

• In AON, nodes represent activities & arrows show precedence relationships

• In AOA, arrows represent activities & nodes are events for points in time

• An event is the completion or beginning of an activity

• A dummy shows precedence for two activities with same start & end nodes

Guidelines for dividing tasks into activities

• Length of each activity should be ~ 0.5 -2.0% of the length of the project;

• Exception for critical activities;• # of activities should be less than 250

Estimating Duration of Project Activities

• Stochastic Approach (past data available)• Deterministic Approach (past data

available, variability negligible)• Modular Technique (decomposing activity

into sub-activities)• Benchmark Job Technique (repetitions of

activities)• Parametric Technique (cause-effect)

A House Project

TaskFollowsTask(s)

Duration

(Weeks) Task Description

Manning Level

A Start 1.0 Clear site 3

B Start0.6 Obtain lumber and other basic

materials1

C Start2.0 Obtain other materials and

components1

D B 2.0 Prefabricate wall panels 4E B 0.9 Prefabricate roof trusses 3

F A, B1.0 Form and pour footings and floor

slab3

G D, F 0.3 Erect wall panels 4H E, G 0.2 Erect roof trusses 4J C, H 0.5 Complete roof 3K J 2.0 Finish interior 4L J 1.0 Finish exterior 2M L 0.4 Clean up site 1N K, M 0.2 Final inspection and approval 1

Project Network for a House(AOA)

1

A1.0

2

3B0.6

C2.0

4 5 6 7 109

8

D2.0

E0.9

F1.0

G0.3

H0.2

J0.5

K2.0

L1.0

M0.4

N0.2

Concurrent Activities

1

DummyA

1 2

A

BB

Incorrect precedence relationship

3

2

Correct precedence relationship

Project Network for a House(AON)

Start End

A1.0A

1.0

B0.6

C2.0

D2.0

E0.9

F1.0

G0.3

H0.2

J0.5

K2.0

L1.0

M0.4

N0.2

Critical Path

• A path is a sequence of connected activities running from start to end node in network

• The critical path is the path with the longest duration in the network

• Project cannot be completed in less than the time of the critical path

Critical Path (AOA)

1

A1.0

2

3B0.6

C2.0

4 5 6 7 109

8

D2.0

E0.9

F1.0

G0.3

H0.2

J0.5

K2.0

L1.0

M0.4

N0.2

1-3-4-5-6-7-9-10

0.6+2.0+0.3+0.2+0.5+2.0+0.2 = 5.8 weeks

Critical Path (AON)

Start End

A1.0A

1.0

B0.6

C2.0

D2.0

E0.9

F1.0

G0.3

H0.2

J0.5

K2.0

L1.0

M0.4

N0.2

B-D-G-H-J-K-N0.6+2.0+0.3+0.2+0.5+2.0+0.2 = 5.8 weeks

Early Times(House building example)

• ES - earliest time activity can start• Forward pass starts at beginning of

CPM/PERT network to determine ES times

• EF = ES + activity time ESij = maximum (EFi)

EFij = ESij + tij

Late Times

• LF - latest time activity needs to finish & not delay project

• Backward pass starts at end of CPM/PERT network to determine LF times

• LS = LF - activity time LFij = minimum (LSj)

LSij = LFij - tij

ExampleDetermining ES, EF, LS, LF

1 2 4 6 7

3

5

32

0

1

31

1

1

B

A C

Dummy

G

FD

E

ExampleDetermining ES, EF, LS, LF

1 2 4 6 7

3

5

A, 3B, 2 0

C, 1E, 3

Dummy

G, 1

F, 1D, 1( )ES=0, EF=3

( )ES=3, EF=5

( )ES=3, EF=4

( )ES=5, EF=5

( )ES=5, EF=8

( )ES=5, EF=6 ( )

ES=6, EF=7

( )ES=8, EF=9LS=8, LF=9

LS=7, LF=8

LS=5, LF=8

LS=6, LF=7

LS=5, LF=5

LS=4, LF=5

LS=3, LF=5

LS=0, LF=3

Activity Slack

• Activities on critical path have ES=LS & EF=LF

• Activities not on critical path have slack

Sij = LSij - ESij

Sij = LFij - EFij

Example:Activity Slack Data

010101003300

6-75-64-64-53-42-42-31-2

9988786788556756555545345533

Slack(S)EFLFESLSActivity

Example:Activity Slack Data

010101003300

6-75-64-64-53-42-42-31-2

9988786788556756555545345533

Slack(S)EFLFESLSActivity

0

0

0

4-6

3-4

2-3

8855

5555

5533

Probabilistic Time Estimates

• Reflect uncertainty of activity times• Beta distribution is used in PERT

a = optimistic estimatem = most likely time estimateb = pessimistic time estimate

6

bm4ate

Mean (expected time):

Standard Deviation:6

ab

Examples of Beta Distribution

m = t ba

P (

time

)P

(tim

e)

ta bm

P (

time

)

ta bm

PERT Example

Equipment installation

1

2

4

6

73 5 9

8

Manual Testing

Dummy

System Training

Dummy

System Testing

Orientation

Position recruiting

System development

Equipment testing and modification

Final debugging

System changeover

Job training

PERT ExampleActivity Information

1 - 2 6 8 10 8 .441 - 3 3 6 9 6 1.001 - 4 1 3 5 3 .442 - 5 0 0 0 0 .002 - 6 2 4 12 5 2.783 - 5 2 3 4 3 .114 - 5 3 4 5 4 .114 - 8 2 2 2 2 .005 - 7 3 7 11 7 1.785 - 8 2 4 6 4 .447 - 8 0 0 0 0 .006 - 9 1 4 7 4 1.007 - 9 1 10 13 9 4.00

Time estimates (wks) Mean Time VarianceActivity a b c t 2

PERT ExampleNetwork with Times

1

2

4

6

73 5 9

8

( )ES=8, EF=8

LS=9, LF=9

( )ES=6, EF=9

LS=6, LF=9

( )ES=3, EF=5

LS=14, LF=16

( )ES=0, EF=3

LS=2, LF=5

( )ES=0, EF=6

LS=0, LF=6

( )ES=0, EF=8

LS=1, LF=9

3

80

5

4

4

7

0

2

93

6

( )ES=3, EF=7

LS=5, LF=9

4 ( )ES=9, EF=13

LS=12, LF=16

( )ES=9, EF=16

LS=9, LF=16

( )ES=13, EF=13

LS=16 LF=16

( )ES=16, EF=25

LS=16 LF=25

( )ES=13, EF=25

LS=16 LF=25

( )ES=8, EF=13

LS=16 LF=21

1

2

4

6

73 5 9

8

1

2

4

6

73 51

PERT Example Early And Late Times

1 - 2 8 0.44 0 8 1 9 11 - 3 6 1.00 0 6 0 6 01 - 4 3 0.44 0 3 2 5 22 - 5 0 0.00 8 8 9 9 12 - 6 5 2.78 8 13 16 21 83 - 5 3 0.11 6 9 6 9 04 - 5 4 0.11 3 7 5 9 2

4 - 8 2 0.00 3 5 14 16 115 - 7 7 1.78 9 16 9 16 05 - 8 4 0.44 9 13 12 16 37 - 8 0 0.00 13 13 16 16 36 - 9 4 1.00 13 17 21 25 87 - 9 9 4.00 16 25 16 25 0

Activity t 2 ES EF LS LF S

Project Variance

• Project variance is the sum of variances on the critical path

weeks89.6

00.478.111.000.1

2

79

2

57

2

35

2

13

2

Probabilistic Network Analysis

Determine probability that project is completed within specified time

= tp = project mean time

= project standard deviationx = proposed project timez = number of standard deviations x is from

mean

x

z

Normal Distribution of Project Time

= tp x

Probability

Time

f(x)

Z

Probabilistic Analysis Example

What is the probability that the project is completed within 30 weeks?2 6 89

6 89 2 62

30 252 62

191

191 0 9719

.

. .

..

( . ) .

weeks

weeks

Zx

P Z 30

What is the probability that the project is completed within 22 weeks?

Z

P Z

22 252 62

32 62

114

114 01271. .

.

( . ) .

Probabilistic Analysis Example

22

Project Planning Tools

• Resource Allocation– Managing the utilization of limited

resources– Using slacks

A House Project

TaskFollowsTask(s)

Duration

(Weeks) Task Description

Manning Level

A Start 1.0 Clear site 3

B Start0.6 Obtain lumber and other basic

materials1

C Start2.0 Obtain other materials and

components1

D B 2.0 Prefabricate wall panels 4E B 0.9 Prefabricate roof trusses 3

F A, B1.0 Form and pour footings and floor

slab3

G D, F 0.3 Erect wall panels 4H E, G 0.2 Erect roof trusses 4J C, H 0.5 Complete roof 3K J 2.0 Finish interior 4L J 1.0 Finish exterior 2M L 0.4 Clean up site 1N K, M 0.2 Final inspection and approval 1

Critical Path (AON)

Start End

A1.0A

1.0

B0.6

C2.0

D2.0

E0.9

F1.0

G0.3

H0.2

J0.5

K2.0

L1.0

M0.4

N0.2

B-D-G-H-J-K-N0.6+2.0+0.3+0.2+0.5+2.0+0.2 = 5.8 weeks

A House Project

TaskDuration(Weeks) ES EF LS LF S

Manning Level

A 1.0 0 1.0 0.6 1.6 0.6 3B 0.6 0 0.6 0 0.6 0 1C 2.0 0 2.0 1.1 3.1 1.1 1D 2.0 0.6 2.6 0.6 2.6 0 4E 0.9 0.6 1.5 2.0 2.9 1.4 3F 1.0 1.0 2.0 1.6 2.6 0.6 3G 0.3 2.6 2.9 2.6 2.9 0 4H 0.2 2.9 3.1 2.9 3.1 0 4J 0.5 3.1 3.6 3.1 3.6 0 3K 2.0 3.6 5.6 3.6 4.6 0 4L 1.0 3.6 4.6 4.2 5.2 0.6 2M 0.4 4.6 5.0 5.2 5.6 0.6 1N 0.2 5.6 5.8 5.6 5.8 0 1

A House ProjectWorker-level Profile (ES)

1 2 3 4 5 8 9 10 11 12 15 16 17 18 19 22 23 24 25 26 1 2 3 4 5 8 9 10 11A 3 3 3 3 3B 1 1 1C 1 1 1 1 1 1 1 1 1 1D 4 4 4 4 4 4 4 4 4 4E 3 3 3 3F 3 3 3 3 3G 4H 4J 3 3 3K 4 4 4 4 4 4 4 4 4 4L 2 2 2 2 2M 1 1N 1

5 5 5 11 11 11 11 8 8 8 4 4 4 4 4 3 3 3 6 6 6 6 6 5 5 4 4 4 1

A House ProjectWorker-level Profile (ES)

0

2

4

6

8

10

12

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

Date

Wo

rke

r-L

ev

el

A House ProjectWorker-level Profile (Adjusted)

1 2 3 4 5 8 9 10 11 12 15 16 17 18 19 22 23 24 25 26 1 2 3 4 5 8 9 10 11A 3 3 3 3 3B 1 1 1C 1 1 1 1 1 1 1 1 1 1D 4 4 4 4 4 4 4 4 4 4E 3 3 3 3F 3 3 3 3 3G 4H 4J 3 3 3K 4 4 4 4 4 4 4 4 4 4L 2 2 2 2 2M 1 1N 1

5 5 5 8 8 8 8 8 8 8 7 7 7 7 4 3 3 3 6 6 6 6 6 5 5 4 4 4 1

A House ProjectWorker-level Profile (Adjusted)

0

2

4

6

8

10

12

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

Date

Wo

rke

r-le

ve

l

Types of Contracts

• Fixed-Price Contracts– Fixed-price with escalation contracts– Fixed-price, re-determinable contracts– Fixed-price incentive contracts

• Cost Type Contracts– Cost plus incentive fee contracts– Cost plus fixed-fee contracts– Time & materials contracts– Letter contract

Chapter 14 Project Planning & Acquisition. Advanced Organizer.

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Transcript of Chapter 14 Project Planning & Acquisition. Advanced Organizer.